5-Minute Interview with Eric Marchand, Collyer Capital

In this series of 5-minute interviews, I shine the spotlight on up-and-coming fund managers in private markets across the globe. All geographies. All strategies. All sectors.

Here's my conversation with Eric Marchand, Managing Partner at Collyer Capital.

Quick facts about Collyer Capital:

• Market segment:?Private equity
• Sector/thematic focus:?Generalist but leaning on the consumer and B2B segments
• Investment stage:?Late stage VC to buyout is our sweet spot
• Geo focus:?Southeast Asia
• Year established:?2022
• Location:?Singapore
• AUM:?Nearing $50m
• Number of funds closed:?0
• Current fund size:?$100m target; currently at $20m, expecting $50m by Q1 2025
• Current fund life:?10 + 1 + 1
• Equity size invested:?

- Single asset exposure: $500k - $2m

- Funds: $5m - $15m

- Secondaries: $2m - $15m

Q: What is Collyer Capital’s investment strategy?

A: We invest in primary, secondary and direct investments in Southeast Asian (SEA or ASEAN) in one programme, targeting the region’s six largest economies. This product is designed to offer a sector-agnostic and diversified exposure to growth capital transactions across the region while limiting inherent volatility.

Q: What is the size of the market opportunity?

A: We estimate our target market to be $40bn+ AUM (as of Q4 2023) and growing historically at 12%+ on average.

Private equity is still relatively under-penetrated in ASEAN at only 0.2% of $3.3tn+ regional GDP which is projected to grow on average at 6% p.a. in the coming years.

Alongside the domestic growth story, ASEAN’s increasingly business-friendly approach is attracting foreign direct investment, which in turn is helping local corporates to look at improving, transforming and rationalising their operations, which private equity ownership can support and accelerate.

We therefore see strong tailwinds in this region which presents as an attractive market opportunity.

Q: You mention you are sector agnostic. What are some of the investments you have made?

A: Although we invest across sectors, we intend for 50%+ of our portfolio to lean into growth in domestic demand.

Our portfolio includes financial services, particularly directed at the underbanked, with investments in BDO Network Bank in the Philippines and Akulaku in Indonesia, which we have underwritten.

B2B logistics is another theme we are exploring more directly with businesses such as FMX in Malaysia or 2GO in the Philippines which our investment partners have invested in.

Given this is our maiden fund, we have no exits to report; however, thanks to secondary exposures in our portfolio, we expect some realisations to start kicking in by Q4 2025.

Q: How do you plan to source investments?

A: Given that we are niche by virtue of being the only diversified private equity investment programme solely focusing on ASEAN, local fund managers will see us as a reliable transaction partner.

Our focus also helps us become more intimate with regional investment teams and gain a higher level of comfort around their ability to deliver viable returns while limiting risks. As we spend more time in the market, we will unearth off-the-beaten-track deal opportunities which larger groups may find harder to find.

Q: What hands-on expertise do you have?

A: Our Partners have worked in a wide range of industries including financial services, education, healthcare, infrastructure and logistics.

From an investment perspective, while we have broad industry experience, we have been less “hands-on” with investments and these have often been limited to board-level involvement.

Q: How are you building your team?

A: We have four Partners in our team supported by one senior resource overseeing operations. To date we have relied on internship programs to battle-test some junior resources, and have worked closely with a local university’s Private Equity Club to develop, identify and nurture talent. Later this year, once the investment programme hits a critical size, we will on-board a couple of analysts to support the senior team.

Q: How do you see your business scaling?

A: We see this a fundamental challenge for us. You often hear “it takes as much time to underwrite a $5m deal as it does a $50m deal…” which is the basis for many funds to justify scaling up.

If we mimic this simplistic adage by raising successively larger funds and underwriting increasingly larger deals, we fear we will quickly grow out of the fertile regional low-to-mid-market which is our sweet spot and investment focus.

Our intention is to scale through deal volume, while maintaining quality risk assessment, therefore underwriting more $5m+ deals more efficiently, without having to bloat our investment team.

We are piloting an AI investment analysis tool which will underpin our transaction due diligence by supporting the team in driving more informed, repeatable and homogenous decision-making. We believe this will help us scale the “flagship” investment program, but we are also in the early stages of exploring new offerings in early-stage venture capital and private credit, which could also leverage our AI platform.

Q: What is your secret sauce?

A: Our secret sauce is our niche regional focus. Our ambition is to deliver an institutional-grade product in a region lacking one with a similar investment approach.

With our local focus, we can become a preferred partner because our interest in the region is unwavering, and it only comes down to the viability of the opportunities themselves. To be perfectly candid, we have already seen this play out in our short history and expect it to continue.

Q: What’s the biggest challenge you have had to overcome?

A: Interestingly, our biggest competitive advantage – our niche regional focus – can also be our biggest challenge. Despite its undeniable attractiveness, the ASEAN region is admittedly not high on everyone’s agenda and the few investors with existing exposure have generally been disappointed. Developed market allocators are retrenching towards their (highly) leveraged domestic markets which have delivered the goods for the last 15+ years, oblivious to the fact that this leverage-driven glut may have run its course. It is challenging to persuade them to consider the perceived minimal risk of a diversified allocation towards more growth-driven investment proposals such as our programme.

Q: What valuable lesson have you learnt that helps drive your approach?

A: My main lesson is that a good product eventually finds its audience and to relentlessly speak to the market, spread the good word about ASEAN and promote how we intend to tackle the opportunity.

Another more long-term lesson is to avoid over-promising and under-delivering. We are avoiding the “growth-driven alpha” narrative that we believe is misguided and lacking nuance, while taking a more conservative view of returns as we have to contend with an environment with limited availability of leverage.

Eric Marchand Collyer Capital

#privatequity #venturecapital #innovation #investing #entrepreneurship #ASEAN #SEA #B2B #consumer